CHAPTER 1

AGRICULTURE AND AGRIBUSINESS

Agriculture is technology-oriented industry that includes production, agriscience, and agribusiness.

DEFINITION

Sum total of all operations involved in the manufacture and distribution of farm supplies; production operations on the farm; and the storage, processing, and distribution of the resulting farm commodities and items. It is also defined as any profit-motivated enterprise that involves providing agricultural supplies and/or the processing, marketing, transporting, and distributing of agricultural materials and consumer products. John Davis & Ray

Godberg

the coordinating science of supplying production inputs and subsequently processing, and distributing food and fiber.

agricultural producing,

- Ewell Roy
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DEFINITION

Merriam-Webster Collegiate Dictionary- an industry engaged in the producing operations of a farm, the manufacture and distribution of farm equipment and supplies, and the processing, storage, and distribution of farm commodities. Australian Department of Agriculture, Fisheries and Forestry (DAFF) a chain of industries directly or indirectly involved in the production, transformation, or provision of food, fiber, chemical and pharmaceutical substrates.
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LINKS IN THE AGRIBUSINESS CHAIN INCLUDE:

Primary production of raw materials (commodities) Tertiary transformation of commodities into valueadded products Supply of inputs to the primary and tertiary sectors Wholesale and retail provision of processed and unprocessed foods, fibers, and related products to consumer Provision of educational, financial, and technical services to all sectors

IS AGRIBUSINESS THE SAME AS AGRICULTURAL ECONOMICS?

Agricultural Economics refers to the monetary and physical factors that affect the profitability of agribusiness. Specific areas of study in agricultural economics include:

community and rural development international trade food safety and nutrition production economics risk and uncertainty analysis of markets and competition natural resource and environmental economics consumer behaviour and household economics agribusiness economics and management
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AGRIBUSINESS AFFECTS US DAILY

INGREDIENTS tomato meat mustard pickle cheese (milk being produced and processed) onion lettuce sesame seeds ketchup (vinegar; tomatoes or banana; condiments) mayonnaise (eggs; vegetable oil, lemon juice; salt; condiments) bun (wheat)
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THE BIG PICTURE OF AGRIBUSINESS

ROLE
AGRICULTURAL INDUSTRY

AGRIBUSINESS

INPUTS SUPPLIES

OUTPUT COMPANIES 7

Figure 1-1 AGRICULTURAL BUSINESS AGRIBUSINESS INPUT SUPPLIES

FEED

AGRIBUSINESS OUTPUT COMPANIES Agri by-products, oil, meal, bran, distillers dried grain Processing Exports
MARKETING TRANSPORTATION PROCESSED FOODS

SEED
FINANCE/ CREDIT

IMPORTS

TRANSPORTATION FERTILIZERS ANIMAL HEALTH

PRODUCTION AGRICULTURIST (FARMERS)

DAIRY

TRANSPORTATION
NONPROCESSED FOODS BEVERAGES TEXTILES

FERTILIZERS WHOLESALER ENERGY CONTAINERS CHEMICALS INSURANCE RESEARCH SCIENCE ENGINEERING EDUCATION MANY OTHERS

LIVESTOCK POULTRY ATERNATIVE ANIMALS CROPS FORESTRY NURSERY FRUITS & VEGETABLES ALTERNATIVE CROPS MANY OTHERS

WOOD & PAPER

WHOLESALER & RETAILER FOOD BROKERS GROCERIES FAST FOOD & OTHER RESTAU Small Animal Care

HISTORY: FARMING & AGRICULTURE

BEFORE AGRIBUSINESS
Hunts wild animals and insects and gathers vegetables

Life before farming and agriculture

Early agricultural development

-had little knowledge on planting some seeds but had problems with growing it - began to raise crops and domesticate animals - invented the sickle

Bronze Age (around 3000 B.C.)

-bronze tools and plows made for easier and faster farming - Nile River was used by Egyptians to irrigate crops - the wheel was discovered, making the transport of crops possible - world population rose from 3M before the invention of agriculture to nearly 100M

HISTORY: FARMING & AGRICULTURE

BEFORE AGRIBUSINESS
-iron hand tools and plows were prepared, some of which are similar to those used today - money was developed because of the need to trade excess crops - leaving land fallow gave the soil a chance to rebuild and store moisture

Iron Age (around 3000 B.C.)

Middle Ages (from A.D. 400 to A.D. 1500)

-crop rotation, new harness for plowing, and selective breeding for livestock - oxen were the main draft animals

-1613 (Virginia colonist John Rolfe)

-shipped tobacco to England - export markets for rice and indigo, as well as tobacco (development of American agriculture) - shipped furs, timbers, and grain to England and southern Europe

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HISTORY: FARMING & AGRICULTURE

BEFORE AGRIBUSINESS
-organic fertilizer was first developed by putting dead fish into the ground along with corn seed - rice, the worlds most popular grain, was 1st grown in United States - George Washington created one of the first experimental farms - Thomas Jefferson experimented with seeds and livestock, invented farm implements, and was active in establishing a local agricultural society.

17th and 18th Century

Agricultural and Industrial Revolution

-Henry Ford developed the automobile - crop rotation was promoted by Charles Townsend - advances in livestock breeding was achieved by Robert Bakewell - the 1st workable seed drill was invented by Jethro Tull - a stationary grain threshing machine was developed to separate grain from waste - John Deere designed a better, one-piece, steel plow - bared wire was invented to keep livestock away from cropland - the 1st gasoline tractor was built in 1892 - seed and plant genetics were being developed by Gregor Mendell

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HISTORY: FARMING & AGRICULTURE

BEFORE AGRIBUSINESS
-surveying of land was used to separate property - cotton gin was invented by Eli Whitney in 1793 - Edward Jenner discovered vaccines to prevent diseases - 1st one piece, cast-iron plow was invented in 1819 by Jethro Wood - interchangeable parts were developed so that people could fix their equipment

Era after American Revolution

1st half of 20th Century

-vaccine was developed for hog cholera - Federal Land Banks were established to give credit to farmers - Hybrid plant seed was developed for better-quality, higher-producing crops

Latter Part of 20th Century

-artificial insemination was more widely used in the livestock industry - productivity increased due to new technology - farmers began to use electric fences - disc plows were widely used - chemical fertilizers and pesticides were wildly used - future trading was used to control risk - computers became popular as agricultural management tools

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BIOTECHNOLOGY
now part of our lives, with advances in gene splicing, cloning and gene mapping. *Agribusiness now includes:

Farm machinery dealerships veterinary supply companies

Commodity brokers livestock supply companies Artificial breeding services animal feed companies Agricultural chemical companies biotechnology firms Research consulting firms export companies
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FARM MACHINERY AND EQUIPMENT

Historical Development of Modern Farm Equipment

The development of modern farm equipment began before tractors made their impact. One of the first agricultural machines that had a significant impact on farming was the cotton gin, invented in 1784 by Eli Whitney. Three years later the cast-iron plow was patented by Jethro Wood. This plow worked very well in Eastern soils but not the hard soils of the Midwest. In 1837, John Deere, founder of John Deere Tractor Company, made the first successful steel plow from a saw blade, and by 1846 he was building 1, 000 steel plows per year. The steel did not wear out as fast as the cast iron, and the soil did not stick to the new plow as it did with the old one, so farmers were very happy with.
Until about 1850 production agriculture changed very little from family to family. Most farm jobs, including sowing, tilling and harvesting, were performed using human muscle power. Agriculture practices were handed down from father to son and from mother to daughter.

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FROM MANPOWER TO HORSEPOWER

At the end of the century, only 50% of Americans lived on farms and the transaction from manpower to horsepower was nearly complete. Production agriculturists were still largely self-sufficient, but they had raised their productivity to a level where they could afford to purchase some horse-drawn farm equipment and a few inputs produced off the farm.

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THE STEAM ERA

Although steam power had its major impact on the industrial sector of the economy, it also played a major role on the farm between 1850 and 1900, which is generally called the Steam Era. It is estimated that over 70, 000 steam engines were produce for farm use. The first steam engines were stationary. The second phase produced a portable steam engine, which was pulled to the fields for specific jobs such as powering wheat threshing machines or sawmills. The third types of farm steam engines were called traction engines and were much more useful as a source of farm power. They pulled themselves as well as large equipment. The first steam traction engine for farm use was made in 1869 by J.I. Case Company.
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CONTINUATION

The steam traction engine ushered in a new era in agriculture by providing an alternate mobile source of power on the farm. However, steam engines had numerous problems, and it was obvious that they were not the ideal source of power that farmers needed. The engines were extremely heavy, bulky, dangerous, expensive, and adaptable to very few chores.

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Internal Combustion Engine Fuel used - A wide variety of fuels were used in the early internal combustion engines. Some of the major types were gun powder, turpentine, coal dust, and kerosene, which were commonly called as coil oil. Even though early tractors were called gasoline tractors, the major source of fuel was kerosene. Most early tractors were made with a small tank for gasoline and a large one for kerosene. The farmers started the engine with gasoline and then switched to kerosene since it was cheaper and more efficient to use. Farm Tractors - The record was not clear as to when the first tractor was made and who made it. However, historian R.B. Gray reports that the Charter Gas Engine Company built six gasoline tractors in 1889 and that in 1890 George Taylor applies for a patent on a walking-type motor plow.
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EFFECT OF THE SHIFT FROM ANIMAL POWER TO TRACTOR POWER

Decreased Demand for Animal Feed. A large portion of the land that had been used to produce animal feed was shifted to food production. It is estimated that if horses were still the major source of power on the farm, they would consume the output of approximately 25% of grain acreage. This would be a major drain on food production capabilities. The conversion to mechanical power not only increased farmers productivity but also increased the amount of food available for human consumption by lessening the amount of feed output needed by work animals. Reduce Labor Time and Cost. In 1936, the Iowa State University Experiment Station reported that production agriculturists with rubber-tired, two-plow tractors were producing 100 acres of corn with 51 days of fieldwork. The same operation with horses required 141 days.
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Market Structure a. Full-line Companies b. Long-line Companies c. Short-line Companies Size of the Farm Machinery and Equipment Market Diversification of Farm machinery and Equipment Companies Foreign Trade Exports Imports Trends in the Farm Machinery and Equipment Industry
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